Bunzl share price: UK firm expands safety unit with three acquisitions

Equities

Bunzl partners with US-based Command Packaging on reusable plastic bags

iNVEZZ.com, Thursday, December 9: Bunzl Plc (LON:BNZL) completed three acquisitions in the US, Germany and Brazil towards the end of 2013, which have brought the company’s spending on acquisitions for the year to some £290 million.

Michael Roney, Chief Executive of Bunzl, commented today in a statement: "Together these acquisitions represent a further investment in the safety sector in three different business areas.” He did not divulge how much Bunzl had spent on each of the three acquisitions.

Bunzl’s share price has edged down 0.07 percent to 1,425.00p as of 12:50 UTC, valuing the UK-based international distribution and outsourcing group at £4.75 billion. This compared with a 0.05 percent dip in the Industrials sector and a 0.20 percent rise in the blue-chip FTSE 100 index as of the same time

Bunzl said that it has acquired US-based SAS Safety Corp, a company specialised in the sourcing and sales of personal protection equipment, principally safety gloves, to distributors. The company is expected to have made $48 million (£29.2 million) in revenue last year. CEO Roney described the purchase of SAS Safety as “a significant and strategic addition” to Bunzl’s safety business in North America.

Bunzl has also bought Germany-based personal protection equipment firm pka Klöcker which is mainly engaged in the sale of own label workwear to distributors. Roney said that the acquisition of pka Klöcker extends Bunzl’s existing safety operations in Germany following the acquisition of Majestic in 2011. The German company is expected to have generated revenue of some €6 million (£4.96 million) in 2013.

In Brazil, the UK company has acquired De Santis Distribuicao Industrial, a company which sells personal protection equipment to end user customers in different market sectors. The company is expected to have generated revenue of some 18 million Brazilian reais (£4.5 million) last year. De Santis is the fifth business acquired by Bunzl in the safety sector in Brazil since the purchase of Prot Cap in 2008.

Bunzl partners with US-based Command Packaging on reusable plastic bags

In a separate development, US manufacturer of reusable shopping and restaurant bags, Command Packaging today announced a new partnership with Bunzl Distribution USA to bring ban-compliant reusable plastic bags to grocers in areas where the use of ultra-thin plastic T-shirt bags is prohibited

Pete Grande, CEO of Command Packaging, commented in a statement: “Contrary to what many have been led to believe, plastic grocery bags are not going out of style; we're innovating ways to make them better and changing age-old perceptions about their shortcomings. This new partnership with Bunzl will go a long way in providing a reusable, recyclable bag for grocers and consumers who care about the environment and affordability.”

Called smarterbags and made from recycled agricultural plastic collected in California, the ban-compliant plastic bags are a cost-effective and environmentally friendly alternative to single-use paper bags and imported reusable bags.

Analysts on Bunzl

Equity analysts at Oriel Securities reaffirmed their “hold” rating on Bunzl shares in a research note issued to investors last Tuesday. The broker has a price target of 1,516p on the stock.

On December 17, analysts at Credit Suisse reaffirmed their “underperform” rating on the stock and price objective of 1,000p. Overall, seven analysts have assigned a “sell” rating, nine have issued a “hold” rating and six have rated Bunzl’s shares as a “buy”. The stock currently has an average rating of “hold” and a consensus price target of 1,290.77p.

As of 13:15 UTC buy Bunzl shares at 1,426.00p.

As of 13:15 UTC sell Bunzl shares at 1423.00p.

Trade stocks with Hargreaves Lansdown from £5.95 per deal.

Prices can go up and down meaning you can get back less than you invest. This is not advice. Dealing services provided by Hargreaves Lansdown.